129 electric vehicles (EVs) that were hypothecated by Gensol Engineering and ride-hailing startup BluSmart were ordered to be seized and moved to lender STCI Finance by the Delhi High Court on Thursday.
Using an item, such as a stock or automobile, as collateral for a loan without giving the lender ownership or possession is known as hypothecation.
According to STCI, Gensol and BluSmart were attempting to illegally dispose of the cars after defaulting on a ₹15 crore loan. Under Section 12A of the Commercial Courts Act, 2015, STCI filed an application to be excluded from implementing pre-institution mediation.
In her May 8 ruling, Justice Manmeet Pritam Singh Arora prohibited BluSmart and Gensol from establishing any third-party rights over the cars. The court-appointed receivers seized the automobiles and gave them permission to make arrangements for their upkeep and charge, citing an immediate risk of asset dissipation.
“Since the plaintiff (STCI) may lose money if possession of the vehicles is not secured and defendant no. 1 (Gensol) proceeds to dispose of the vehicles in favor of third parties, the balance of convenience also lies in favor of the plaintiff,” the order stated.
On October 19, 2023, Gensol signed a financing facility deal with STCI to purchase 129 vehicles, which included a ₹15 crore equipment term loan.
Puneet and Anmol Singh Jaggi, the promoter brothers, provided personal guarantees and a hypothecation deed to finance the loan.
In less than two weeks, there have been five such petitions attempting to stop Gensol and BluSmart from granting third-party rights over their EVs. They are currently prohibited by the court from establishing third-party rights over 619 EVs.
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